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XYZ Corporation has received a firm commitment from its underwriter to purchase 1 million shares of stock that will be marketed to the general public at $23 per share. The underwriter's spread is $1.90 per share and the issuing firm will pay an additional $1.65 million in legal and other fees. The issue was fully sold on the first day and the stock closed at $27.50 on that day. Calculate both the direct expense of issuance and the indirect (i.e., under pricing) expense. What percentage of the market value of the shares is represented by these costs?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91537208

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